. Investment adviser ARTICLES required

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660ky612
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. Investment adviser ARTICLES required

Post by 660ky612 »

Ladies and Gentlemen,

Look at the following article which probably is sounding familiar to you. My work was borrowing the book,
scanned a few pages and performed OCR. Piece of cake!

Where can I find more such articles? Any suggestions?

Maybe please write some private mails to me. Please also visit the Off-Topic forum occasionally.

-------- cut -------------------------------

Fire Your Investment Adviser (author not shown here)

The sad truth is that there are only three kinds of financial prognosticators: those who don't know, those who don't know they don't know, and those who know they don't know but who get paid big bucks to pretend they know. What are they good for? Their primary interest is not yours, but theirs: they are very good at making money for themselves.

Fred Schwed,Jr., in his charming and witty expose of the financial community in the 1930s, tells the story of an investor's first visit to lower Manhattan. The investor was shown large numbers of expensive yachts that were moored close to Wall Street and was told that these were the yachts of the most successful brokers. The investor asked, "Where are the customers' yachts?" Today, the most successful professionals in the financial community are more likely to have Gulfstreams rather than yachts, but the principle is the same. These folks are looking out for their own well-being-not yours.

Financial advisers are generally compensated by earning commissions on the products they sell you. Thus, they have a vested interest in making the investment process seem as complicated as possible so that you must turn to them for advice. And they are likely to push those products on which they make the largest commission-not those that are likely to line your pockets. Financial service companies want you to believe that you can't make financial decisions yourself so that they can collect lucrative fees. Remember the words of Woody Allen: "A stockbroker is someone who invests other people's money until it is all gone."

Jane Bryant Quinn, author of Making the Most of Your Money, quotes from a letter she received from a stockbroker, which describes the situation with uncharacteristic honesty:

The first thing a securities salesman learns is to gain the confidence of his customer. This enables the salesman to more easily sell the customer the products that pay the salesman the highest commission. All securities firms have different commission schedules for different investment products. Most firms will respond that their brokers are free to sell their customers any investment product they wish. But in practice, the broker-salesman is "encouraged" to sell the product most profitable to the firm and do it often. All securities firms also have formulas that indicate how often customers' money should turn over, and these are considered minimums. . . .
I, too, have fallen prey to the siren's song of wealth and glamour that has been and is Wall Street. I have overtraded customer accounts, and bought for them "investments" that made more sense for me than them. I guess I wrote [to you] as a catharsis, and to clear my head and that of my colleagues of the siren's song.
Signed Anonymous


While everyone recognizes that brokers make their living by charging commissions, Wall Street still manages to conceal one very nasty secret: The financial "experts" know precious little more than you know. In fact, I will go out on a limb and tell you that the experts have no idea what stocks you should buy to provide superior future returns. A blindfolded chimpanzee throwing darts at the stock pages can select individual stocks as well as the experts. We will see later that the correct investment strategy is actually to throw a towel over the stock pages and buy a low-cost mutual fund that includes all stocks and does no trading. The sum total value of all the financial data, commentary, opinion, and advice you hear from the media or your financial professional is less than zero. In fact, the "buy" recommendations of Wall Street firms (especially those that tout the stocks of their banking clients) do no better than the few stocks they tell you to "sell." And a good way to go broke quickly is to purchase stock issues (initial public offerings) immediately after they start trading.

Pay no heed to the financial professionals who declare that they know what the stock market will do and what stocks or mutual funds you should buy. Cover stories on the "hottest" stock or "the best" mutual fund for the period ahead may help to sell the investment magazines, but the recommendations are worthless.

And tune out the financial TV channels that feature investment "experts" who make breathless forecasts of the stocks that are poised to double. Pay no heed to the gurus who offer heavily jargoned cliches about the day's market activity. What can you possibly learn from platitudes that pass for insights, such as "Today's decline was caused by buyers moving to the sidelines awaiting a clearer definition of the trend." How many times have you heard an "expert" tell you that "the market rose today because there were more buyers than sellers." Of course, for a trade to happen at all there must be both a buyer and a seller. Money honeys may be pleasing to the eye but not to your pocketbook. You can't blame the TV producers for trying to make it interesting. After all, their job is to produce as many eyeballs as possible for advertisers so that you won't switch channels to watch Stone Cold Steve Austin body-slam the Rock. As they say on the wrestling shows, "Don't try this at home." Following the advice of these financial "experts" can be hazardous to your wealth. One writer, Nassim Nicholas Taleb, author of Fooled by Randomness, suggests that you listen to CNBC with the sound off so that the facial expressions and body gyrations of the "experts" seem humorous and you'll be less likely to follow their advice.

It is incomprehensible to me that consumers will spend hours researching the merits of various $50 portable CD players yet will casually spend thousands of dollars to buy a stock that has been hyped in a TV interview, a brokerage report, or even worse on a rumor or stock tip from one's golfing buddy or brother-in-law. Investors are incredibly credulous. Professional market strategists and analysts make predictions and recommend trades because trades generate revenues for their employers-not because they really have any expert knowledge that no one else possesses. Cancel your subscriptions to worthless investment magazines and newsletters. At least 95 percent of what you will read or hear will be worthless. Watch the cooking channel or the gardening channel if you want useful advice. Heed the advice of comedian Lily Tomlin: "No matter how cynical you become, it's never enough to keep up."

In the early 2000s, Forbes magazine editorialized:

During the last year as well as for the year before-but heck, let's just say for the whole screaming decade that's now in the grave-your average pro on Wall Street has failed to beat the indexes. . . . No, your average Wall Street pro hasn't beaten a dart tossed by a drunk in a bus depot since 1994. . . . For five years running the pros have had their jockstraps yanked up to their earlobes by the Beards-town Ladies.

In fact, Forbes would later learn that these folksy mid-western ladies who claimed to have achieved phenomenal investment results and who interlaced their stock-market advice with recipes such as "stock market muffins guaranteed to rise" were, in fact, cooking the books as well. Their published returns had been wildly inflated by counting their club dues as investment returns.

Even in fields such as medicine where true expertise really does exist, the greatest gains come from following simple advice. Despite all the gains from various wonder drugs, gene therapy, and new surgical techniques, Charles Ellis, author of The Loser's Game, reminds us that most medical progress has come from one old invention and one simple technique. More lives have been saved and prolonged by penicillin and by washing hands than by any other pharmaceutical or medical technique.

As Malcolm Forbes realized a long time ago, the way to get rich from investment advice is to sell it-not to take it. Charles Ellis points out, "It must be apparent to intelligent investors that if anyone possessed the ability [to forecast stock prices] consistently and accurately, he would become a billionaire so quickly that he would not find it necessary to sell his stock market guesses to the general public." Tune out the TV investment gurus who dispense worthless advice. I promise you that the simple rules given here are all the investment advice you will ever need. Moreover, by keeping your savings and investment strategy as simple as possible, you will free up the time to do the really important things you want to do in your life such as spending more time with friends and family.

Once you've fired your financial adviser and canceled the subscriptions to all your investment magazines, you may be pleasantly surprised that you now have quite a few extra dollars to invest. Don't rush into doing so, however, until you learn about two more basic points: the menu of investment choices available to you and the risk-return relationship.

--- end of article

660ky612 from Hong Kong
Last edited by 660ky612 on Sun Oct 21, 2007 2:09 pm, edited 1 time in total.
winterescape
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Re: _____________________Investment adviser ARTICLES requ

Post by winterescape »

660ky612 wrote:Where can I find more such articles? Any suggestions? 660ky612 from Hong Kong
Have you seen this story about "the study of the decade"?

http://advisor.morningstar.com/articles ... docId=4482
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jimgour
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Very Interesting Article

Post by jimgour »

Winterscape:

Very Interesting Article. I just sent it on to twenty or so friends. Maybe one or two of them will listen!

Jim
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CABob
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Money magazine

Post by CABob »

There is an article in the July 2007 issue of Money magazine entitled Why "Trust Me" makes me nervous and the subtitle Planners try to make money for clients, but also for themselves. Anyone who says otherwise is trouble.
Unfortunately I could not find a link to the article at http://money.cnn.com/magazines/moneymag ... 1/toc.html
One of the books I've read had a few paragraphs describing how a portfolio placed with a broker for a few years could easily make more money for the broker than it makes for the client. Unfortunately, I don't recall what book it was in. Perhaps someone else can remember the book.

Bob
tibbitts
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copyright?

Post by tibbitts »

Isn't this copyrighted material?

Paul
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DaleMaley
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Post by DaleMaley »

Lies Your Broker You: What to Watch for and Still Achieve Financial Security.

I'm sure every profession is a normal distribution in regards to honesty of the people in that professions....with 5% dishonest on the low end......5% saints on the high end......and the rest in between.........but Saler's book covers the low end of the bell curve on broker integrity very convincingly.



:lol:
Most investors, both institutional and individual, will find that the best way to own common stocks is through an index fund that charges minimal fees. – Warren Buffett
Topic Author
660ky612
Posts: 245
Joined: Thu Jun 14, 2007 11:32 am
Location: Hong Kong SAR

Re: _____________________Investment adviser ARTICLES requ

Post by 660ky612 »

winterescape wrote:
660ky612 wrote:Where can I find more such articles? Any suggestions? 660ky612 from Hong Kong
Have you seen this story about "the study of the decade"?

http://advisor.morningstar.com/articles ... docId=4482
The Morningstar link was broken, try this http://trendfollowing.com/whitepaper/Th ... Decade.pdf

The paper mentioned in the "The study of the Decade" by Morningstar has became
"Assessing the Costs and Benefits of Brokers in the Mutual Fund Industry by Daniel BERGSTRESSER, John CHALMERS, Peter TUFANO, 1st October, 2007" http://papers.ssrn.com/sol3/papers.cfm? ... _id=616981

660ky612 from Hong Kong
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Boris
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Location: CT

Re: _____________________Investment adviser ARTICLES requ

Post by Boris »

660ky612 wrote:
winterescape wrote:
660ky612 wrote:Where can I find more such articles? Any suggestions? 660ky612 from Hong Kong
Have you seen this story about "the study of the decade"?

http://advisor.morningstar.com/articles ... docId=4482
The Morningstar link was broken, try this http://trendfollowing.com/whitepaper/Th ... Decade.pdf

The paper mentioned in the "The study of the Decade" by Morningstar has became
"Assessing the Costs and Benefits of Brokers in the Mutual Fund Industry by Daniel BERGSTRESSER, John CHALMERS, Peter TUFANO, 1st October, 2007" http://papers.ssrn.com/sol3/papers.cfm? ... _id=616981

660ky612 from Hong Kong
What am I missing here??

So I read this study... and it sounds good... advisors don't add value and in fact reduce the returns because of the costs. So far so good... but then on page 4 I read:
Another investment class that is relatively unknown to most advisors is covered call funds.
Funds such as Madison Strategic Sector Premium Fund MSP, pays nearly 10% per year,
invests in high-quality stocks, and can make money from call-writing even if the market is
flat.

How many advisors make money from equities in a flat market? Very few. However,
funds like MUC and MSP help clients prosper even when the stock market is flat or slightly
declining. In addition, MSP sells at a discount to net asset value.

MSP and MUC are not perfect--no investment is. Yet when you can earn about 10% per
year (taxable) as MSP is doing or 6% per year after-tax as MUC is doing, you do have an
advantage over the 2.924% taxable return that so many advisors are delivering.
Now.... where the hell did that come from? I mean how is that any different than what every adviser tells you when they talk about history or predicting what kind of market the next year will bring? Clue me in please...

Boris
Short term moves in the market are like "a tale Told by an idiot, full of sound and fury, Signifying nothing." | - John C. Bogle quoting Shakespeare
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Rob5TCP
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re: 10% MSP

Post by Rob5TCP »

Let's look at these last 2 years - return for
2006 - 11.39
2007 - -7.86

Not quite a safe 10% a year. When you issue a covered call - it might work if the stock goes NOWHERE - flat. If it loses value, you receive some income from dividends (if any) plus the value of the covered option you issued.
If the issue rises dramatically, you have the value of the option, but you either have to pay on the option or sell the stock to cover the option. For your next period, more stock would need to be purchased to have the covered option.

If it was so easy - everyone would do it. I saw one of those pornographic infomercials about covered options.
xenial
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Post by xenial »

There's a covered call ETN available: BWV
The iPath® CBOE S&P 500 BuyWrite Index ETN offers investors cost-effective and tax-efficient exposure to the CBOE S&P 500 BuyWrite Index, commonly known as the BXM Index (the "Index"). The Index is designed to measure the total rate of return of a hypothetical "buy-write", or "covered call", strategy on the S&P 500® Index. This strategy consists of a hypothetical portfolio consisting of a "long" position indexed to the S&P 500® Index (i.e. purchasing the common stocks included in the S&P 500® Index) and the sale of a succession of one-month, at– or slightly out-of-the-money S&P 500® Index call options that are listed on the Chicago Board Options Exchange ("CBOE").
Best wishes,
Ken
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